CFH Clearing’s Paul Jackson talks prime brokerage, connectivity, technology, and institutional success in Asia

The Asia Pacific region is paramount when it comes to the FX industry’s focus, whether it is on technological prowess, connectivity between Western and Asian markets or the straight forward onboarding of clients and partners to good quality global firms.

Whilst many brokerages in most regions focus on China, Malaysia and Indonesia – all of which are highly lucrative regions – Japan, the world’s largest center for retail FX by volume, remains a very domestic-market focused environment, with many companies having attempted to gain market share to little avail.

One company that bucks this trend is CFH Clearing, which recently partnered with efx.com Securities Co, one of Japan’s prestigious retail brokers, has partnered with CFH Clearing to offer ClearWeb, NetStation and NetDania Mobile to clients.

The rapidly growing brokerage has customised the front-end trading solutions and re-branded the platforms ‘ClearStation’. The platforms, which include Japanese translations, go live this month.

Today in London, FinanceFeeds spoke in detail to Paul Jackson, Head of Sales at CFH Clearing who elaborated in detail on how CFH Clearing positions itself in such important markets, and what is necessary to provide the correct and comprehensive service to corporate partners.

Tell us a bit about your background in financial technology, and how the combination of technology provision and prime brokerage solutions are instrumental to CFH’s expansion plans

I began my career as a Spot FX and Options trader for a US Bank in 1995. I then joined CMC Markets where I worked for 14 years in a variety of roles including managing the FX Desk, Global Head of Sales Trading and Head of Customer Strategy. As a trader I was chiefly responsible for managing risk and dynamically hedging using various bank GUI’s, proprietary platforms and risk management systems.

In 2010 I was appointed Group Sales Manager at LMAX Exchange, where I gained more exposure to API (Java, .Net, FIX) connectivity and algorithmic trading using a Central Cleared MTF model.

I joined CFH Clearing as Global Head of Sales in 2014. I was always impressed by CFH’s significant investment in its core infrastructure, with the development of its own front and back-end technology, which is complementary to its institutional liquidity provision and Prime Broker solutions.

CFH has now established a global footprint and a reputation for excellence worldwide. Our institutional clients, consisting largely of brokers, banks and hedge funds, access pure interbank liquidity via our Prime Services and utilise our White Label technology and ClearVision suite of products, including our ClearVision Risk Management tool. We have grown rapidly over the last few years in all key FX territories. In particular, we have gained traction in Asia and are continuing to invest heavily in our resources in the APAC region.

The APAC region is of great interest to many retail FX brokerages from the West. What do brokers look for with regard to liquidity management and integration into live markets and prime brokerages compared to their Western counterparts?

They have the same high standards and requirements as their Western counterparts. The Asian market is maturing rapidly. Previously, many brokers were looking for the highest leverage possible but the trend is now towards a much more measured approach, with a better understanding of risk. There is also far greater awareness of the risk associated with partnering with Liquidity Providers that offer ‘non-conventional’ terms.

In essence, to run as an effective and successful brokerage, brokers in Asia want to partner with a reputable, established FCA regulated Prime of Prime brokerage and they recognise the importance of robust, reliable connectivity in order to be able to process more trades per millisecond. Risk management is also high on the agenda. In addition, Asian brokers need tools to help them to meet the local regulatory reporting requirements.

Indonesia and Malaysia are important emerging regions with a vast potential customer base for Western firms. How can CFH provide global Tier 1 liquidity and connectivity to help brokers and white label partners in Indonesia and Malaysia compete with domestic giants such as Monex Investindo that have their infrastructure in place locally?
 
We would not be providing our services in Indonesia and Malaysia if we didn’t think we had a compelling and competitive offering for brokers and banks in the region. CFH has a global technological infrastructure, with prime co-locations and matching engines in the UK and Japan. We also have a Point of Presence in Hong Kong and robust connectivity running through APAC. CFH can help connect clients to Tier 1 Liquidity Providers and Trading Venues, offering exceptional pricing and transparent STP execution.

For regulated institutional clients, we have multiple proprietary White Label platforms and devices (Pro, Web, Mobile and API).  Each platform can be customised to best serve the needs of the broker and their end clients. We also have a range of products to help them to diversify and potentially grow new revenue streams. Using ClearVision, our proprietary advanced Back Office and Risk Management suite, brokers can centrally manage clients, platforms and trading risk.

Do you think that the relationship between brokerage and prime of prime in Asia differs greatly from that of Western firms, and if so, how does CFH’s solution cater for the different requirements in access to liquidity and order execution?

Not especially. Each geographical region has its preferred platform and instruments to trade. In Asia, NetStation and CFH Mobile has proved particularly popular due to its multi-lingual front-end, advanced charting and agile reporting.  We also support MT4 and MT5 which are the most widely used platforms by retail brokers in the Far East.

The APAC region is very fragmented in terms of regulations, cultures and the maturity of local markets. That leads to different preferences in the area of liquidity. The most established and well educated FX scenes in the regions are those of Australia, Japan, HK and Singapore. Brokers in those countries have seen numerous black swan events and therefore pay serious attention to safety of funds and reputable liquidity providers. How is CFH poised to cater for this?

CFH Clearing is FCA regulated and carries out stringent due diligence to ensure that we are on-boarding the right type of clients. We have invested heavily in our core technology to ensure we provide our clients with a robust and efficient service, backed up with 24hr support worldwide.

CFH has direct relationships with Tier 1 Banks and a strong Prime Broker relationship. We continuously monitor the market and implement realistic and well considered trading terms and conditions.

One of the biggest lessons most brokerages learned from SNB and Brexit was the importance of good risk management systems and tools. CFH can provide brokers with market-leading automated risk manage systems and tools to effectively support, monitor and alert client positions.

CFH has survived Black Swan events and has experienced growth during volatile times largely because of the strength of our core values, advanced technology, product offering and service.

What does CFH plan to achieve in the Asia Pacific region during the course of the next 12 months?

Our immediate focus is on expanding our presence in Hong Kong and Japan and branching out into other territories. We will also continue to look into opportunities to invest or acquire companies to strengthen our offering even further… so watch this space!